The Future of the CPO How will the Internet of Things change the procurement function? Will the Procurement role become superfluous through new automated purchasing? Learn how to migrate from a CPO to a CVO (Value) and evolve from archaic category management to running the automation process.

1. HOW THE DIGITAL
ECONOMY WILL CHANGE
PROCUREMENT
Dr. Marcell Vollmer, SVP and Chief Operating Officer
June 23, 2016

2. Things have
changed.

3. Services mash-up

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Today, four trends are dramatically reshaping the economy
Cloud Computing
Technology infrastructure is now rented to
eliminate barriers to entry. Project timelines
are dramatically shortened, and customer
relationships are becoming increasingly direct.
Big Data
The limits of 20th century computing power are gone.
Networking and in-memory computing allow for the
creation of new business opportunities previously
unimaginable.
Industry 4.0
Sensors, robotics, 3D printing, and artificial
intelligence are the new normal, driving an
outcome-based economy.
Hyper-connectivity
Every supplier, consumer and machine is
connected, disrupting established business
channels, processes, and relationships.
Networks

5. Disruptive Trends for
Procurement & Source-to-Pay

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Mega Trends and Innovations Impacting the
Procurement Function of the Future
Industry 4.0
Internet of Things
Digital
Business
Today
Business Value of
Procurement
Tasks are
operative,
tactical and
strategic
Key KPI:
Savings
Paper based
POs / Goods
Receipt and
Invoices
Scanning
Sequential
Processing of
purchase
requisitions and
POs
Tomorrow
Business value –
‘Value Creation
Officer’
Supplier
innovations
Supplier Risk &
Performance
3 D
PrintingWarehouse
ordering
automation
Lights out shared
services with end-to-
end automation
Spot buy integration
in catalogs
Networks &
Marketplaces
B2C
B2B
connected
commerce

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Procurement of the Future and Impact of Mega Trends
Digitalization will change Procurement Organization, Processes,
Systems and require new skills for Buyers
Study Fraunhofer Institue and BME from 2016
Digitalization
In Procurement
1
Business Value
5
Digital
Sourcing
2
Organization
4
Big Data
3
Supplier
Collaboration
6
Networks &
Marketplaces
x

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TRAVEL
Concur
LABOR
SAP Fieldglass
SUPPLY
CHAIN
SAP Ariba
HEALTH
CARE
BUSINESS
FINANCIAL
SERVICES
8Customer
SAP’s Networks for Business simplify business collaboration

9. #MakeProcurementAwesome

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SAP Ariba in the
SAP Context
© 2016 SAP SE or an SAP affiliate company. All rights reserved. 4Internal
Open platform, Integration to SAP and Non SAP Solutions
BUYERSSELLERS
Fulfill SettleSell
SPENDCATEGORIES
Customer Management
Direct and Supply Chain
Indirect and MRO
Labor and Services
Travel
Procure SettleSource
Supplier Management
Network
Digital
Core
Customer
Workforce
Assets
Enablement
& Internet
of Things
Experience
Omnichannel
Supplier
Collaboration Business
Networks
SAP S/4HANA Platform

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 One place to buy goods and services
 Smart guidance to direct users to the right items, preferred
suppliers, and the compliant policies
 Configurable policies to guide users to the right business process
 Preferred supplier list integrated into the buying experience
 User feedback on suppliers and items integrated into the buying
process
 Recommendation engine to achieve 3-bids and a buy based on
business policies
 In-context collaboration between users, procurement experts, and
suppliers
 Empowerment of spend owners/departments to manage their
policies, suppliers and drive compliance
 Same user experience on all devices
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Key 2016 innovation: Guided Buying

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Key 2016 innovation
Direct Material Sourcing and Contracts
 Supporting multi-level BOM’s, Product costing, Japanese Auctions
 Advanced optimization options, Enhanced Material master and ERP
integration, 360° Material/Part and Category Report, Pricing
Conditions – Volume/Time Breaks, What-if Analysis,
 Simplified Quoting Interface for Suppliers
Predictive Maintenance and Scan to Order
 Automated ordering by IoT sensors indicating
maintenance services
 One click ordering by any device capable capturing
pictures

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 Guided Invoicing
 new UI, with guidance for exceptions and resolution handling
 persona-specific flows (for tax manager, accounting and mass
edit of invoices
 Enhanced queue management
 Demand Aggregation
 With Ariba Sourcing integration
 Service PO’s with SAP ERP integration
 Real-time budget checks and reservations
directly in SAP ERP
 Advanced Analytics
 Graphical online reports for in-depth analysis of key metrics &
KPIs, to identify patterns, bottlenecks & trends over longer
periods of time
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Key 2016 innovation: Invoicing and Procure to Pay/Order

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Today’s State
75
Internally
Digitized
100
End-to-End
Digital
Enterprise
0
Paper
and Pen
25
Basic Digital
Records
50
Ad hoc
Digitization
Desired State

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13%
More
Revenue
50%
More
Profitable
19%
Higher Market
Valuation
MIT Sloan Management Review and Deloitte’s 2015 Global Study of Digital Business
Organizations that rank high on digital maturity

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SAP runs Ariba

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SAP’s Procurement Function 2004 – 2011
SAP SRM 5.0 (with SRM Catalog) and SAP ERP 4.7
Vendor Invoice Management

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Evolution and Transformation of SAP’s Procurement Function 2012 - 2015
SAP SRM 7.02 integrated (only workflows in use) into SAP ERP on HANA
Vendor Invoice Management
2011 Upgrade SRM 7.02
2011 Global Categories and
Procurement SSC
2013 SAP Ariba
2014 SAP Fieldglass
2015 Concur
Global Categories for all Spend (approx. 4bn in 2015)
Spend Visibility | eSourcing & eAuctions | Contract Management
Supplier Management | Ariba Catalog & Spot Buy 2014ebay
Ariba Purchase Order & Invoice Automation | Discount Pro
Travel booking and reimbursement
Temp labor and SOW sourcing

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Achievements
Streamline Entire Source-to-Pay Process Achievements: Facts & Figures
3 Months
Implementation Time
>5,000
Suppliers on ARIBA
Network
>400,000
Documents transmitted
50%
Increase in Automation
20%
Productivity gain
10.6 FTEs by migration
25 FTEs by automation
>1.5bn
Purchase Order
value sourced
 Leverage economies of scale and control through shared
services
 Cut costs through automated data extraction and process
automation
 Create workforce efficiency through streamlined processes
including mobile approvals
 Reduce errors at the source
 Improve working capital management through better visibility
to cash requirements
 Optimize cash discount utilization including dynamic
discounting
Source-to-Pay Automation, Business Networks and Shared Services

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Key Takeaways on Transforming Procurement
Transform Organization to fit future needs
Develop people and manage change
Implement end-to-end processes and cloud
systems to automate transactional processes
Leverage the power of
social, supplier, and business networks
to get innovations and to deliver solutions
to the lines of businesses
Transform
to Run Simple
Get Linked
to Stay Relevant

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Thank you
Dr. Marcell Vollmer
SVP and Chief Operating Officer